[co-author: Lauren Howells]
The UK Government has published the much anticipated Employment Rights Bill. Dubbed the “biggest shake-up in UK employment law in over 30 years", the Bill proposes numerous reforms that will impact both employers and employees. The Government describes the Bill as 'pro-worker and pro-business', which has perhaps caused it to scale back some of the changes, but those that remain are undoubtedly significant nonetheless.
In this alert, we highlight some of the most notable aspects of the Bill, when they will take effect and what further reforms are to be introduced later, as part of the Government's broader agenda for UK employment law.
WHAT’S IN THE BILL?
UNFAIR DISMISSAL
Unfair dismissal will become a 'day 1' right, with the current two year qualifying period being removed. Significantly, employers will be able to dismiss during or at the end of a probationary period. The length of that period is to be consulted on, but the Government has stated its preference is nine months. Also subject to consultation will be the process required prior to a probationary dismissal. The Government suggests that this could simply comprise a meeting with the employee to discuss performance concerns, during which they may be accompanied.
‘FIRE AND RE-HIRE’
New automatic unfair dismissal rights will be given to employees whose employment is terminated as part of a re-contracting exercise, unless:
- the employer can point to financial difficulties affecting its ability to continue operating as a going concern, and
- the changes are not ones they could reasonably be expected to avoid.
FLEXIBLE WORKING
Employers' rights to reject requests for flexible working will become more constrained, although the Bill does not go as far as some had anticipated, given the Government's stated aim to make flexible working the 'default' option. Employers can still reject a request provided that, in addition to the current requirement of identifying one of the statutory grounds for refusal (which are broad), they can also show that it is 'reasonable' to refuse on those grounds.
ZERO HOURS CONTRACTS
Workers on zero hours contracts, and workers with a ‘low’ number of guaranteed hours who regularly work more than these hours, will have a right to be offered a guaranteed hours contract reflecting the hours they regularly work over a 12-week reference period. Importantly, workers can choose to remain on their zero hours contract if they wish.
SEXUAL HARASSMENT
Outside of the Bill, later this month, the new positive duty to prevent sexual harassment comes into effect. That provision, as it stands, requires employers to take 'reasonable steps' to prevent sexual harassment. The Bill will amend this to require 'all reasonable steps' and provides for further regulations to be made specifying what steps are to be regarded as 'reasonable'. Employers will also be liable if they fail to take all reasonable steps to prevent harassment by third parties.
FAMILY-FRIENDLY LEAVE
Paternity and parental leave will become ‘day 1’ rights and there will be a new right to (non-parental) bereavement leave from day one.
STATUTORY SICK PAY
The lower earnings limit for statutory sick pay will be removed and there will be no waiting period before pay can be received. This means that workers will be entitled to sick pay from day one, rather than day four.
COLLECTIVE REDUNDANCY
The Bill removes the concept of 'establishment' from the current collective redundancy legislation. This means that collective consultation obligations will apply where 20 or more dismissals are proposed across an entire business, rather than the current site-specific approach.
WHEN WILL THE CHANGES TAKE EFFECT?
Many of the provisions in the Bill will require additional regulations once it is passed, and a consultation period will follow to address those. The Government has said this will happen during 2025, meaning the majority of reforms will take effect no earlier than 2026. Specifically, the unfair dismissal changes are to take effect no sooner than Autumn 2026.
FURTHER REFORMS STILL TO COME
There are various reforms that the Government had proposed in the run-up to the election, that do not appear in the Bill. In a separate "Next Steps" paper issued at the same time as the Bill, the Government has indicated that it intends to introduce many of these in due course, including:
- extending gender pay gap reporting for large employers, to include race and disability;
- reforming the current three-tier system of employment status and moving towards a system of 'worker' and 'self-employed';
- introducing a ‘right to switch off’, which will be brought in through a statutory Code of Practice.
CONCLUSIONS
The provisions of the Bill highlighted here do not include all of the changes – for example we have not touched on the various changes designed to increase trade union rights. It is clear that this is a significant piece of legislation, which all employers will need to consider carefully. It is encouraging that there will be a lengthy period of consultation on most aspects, giving employers time to prepare.
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